Will the pandemic kill dine-in as we know it? The answer isn't so simple.
In the current day and age, how do we define what is or isn’t a restaurant? It is a straightforward question, yet difficult to answer. Industry professionals and consumers alike could debate this for days and never arrive at a consensus; a point proven by looking at definitions from several dictionaries.
When I turn to my old-school yet trusty 2001 edition of Webster’s Desk Dictionary, I find a very simple entry: an establishment where meals are served to customers. Fast-forward to a contemporary resource at Dictionary.com, and the definition is identical. The most recent Webster’s definition found online says: Business establishment where meals or refreshments may be purchased. Cambridge? A place where meals are prepared and served to customers. What of Oxford? A place where people pay to sit and eat meals that are cooked and served on the premises. I could cite additional sources, and the result would be a compilation of nuances that add fodder for the debate.
If the most general textbook definitions were applied, the list of establishments qualifying as a restaurant would extend deep into the world of retailing. Virtually every convenience store, grocery store, and cafeteria would make the list, as would every store that sells food within their four walls. Every food truck, snack stand, and kiosk earn a spot.
Why does any of this matter? Because to answer the question of whether dine-in is “dead,” we must consider the universe within which the dine-in experience resides.
Herein lies the challenge: arriving at a consensus of what a restaurant is. Some would argue that a dine-in experience is at the core of being a restaurant. If you aren’t preparing and serving a meal to a guest on-site, then you are … well, something else; perhaps the close relative of a true restaurant, or maybe a distant cousin. But not an authentic restaurant.
I find merit in this point of view. The kitchen may be the engine, but it is the dining room where we feel the pulse of the business; where we see satisfaction on the faces of our customers; satisfaction derived from great food and the value of communion, not only among the patrons at the table, but with those who serve them. It is where we find the true heart of the business; where we experience the joy and pride derived from providing delicious food and heartfelt service.
Yet at the same time, our industry has evolved in ways that have moved restaurateurs further and further from the classic restaurant experience. The evolutionary tale spans decades, and many are the restaurant variants we find in today’s marketplace. A myriad of factors have driven these changes. The pandemic has punctuated the evolutionary tale, but thankfully, it is not akin to an extinction event. Restaurants, and the dine-in experience that define the industry more than any other element, have not gone the way of the dinosaur.
It is too early to predict whether a post-pandemic world will bring with it the release of pent-up demand coupled with a renewed appreciation for the dine-in experience. Early in the pandemic, some were predicting just that, and latching on to the idea that we would have a redo of the “Roaring Twenties” of a century ago. But much time has passed, and as the weariness of the pandemic grates on us, we seem to hear less of such prognostications.
There is a fascinating aspect to all this, courtesy of the pandemic. At its lowest point, dine-in business was almost extinct. Virtually down to zero. To survive, many restaurants had to, at least temporarily, reinvent themselves. Many borrowed from the playbook of their brothers and sisters from the outer fringes of the restaurant community, including the universe of grocery and convenience stores.
And now, the traditional community is building back; rising to the point that it would have presumably fallen if not for the intervention of the pandemic. Prior to 2020, there was arguably too much dine-in capacity relative to demand. Traffic counts and average unit volumes for casual dining brands and independents alike had been in decline, yet new restaurants perpetually appeared, which cut the pie into smaller and smaller slices. The pandemic has changed that. The opportunity now exists for a reset when it comes to restoring health to the world of traditional restaurants and the dine-in experience.
If I were a full-service restaurateur, I would relish the thought that the segment was headed for a renaissance. Granted, there is much discussion within those circles about how their fortunes are tied to the retention and even growth of off-premises business during the months and years ahead. But if I were in their camp, I would be placing my bet on the winners being those who excel at providing the elements of a guest experience that comprise the heart of the restaurant—in the dining room.
But what of the dine-in experience for quick-service and fast-casual restaurant brands in the post-pandemic world? Every brand is faced with sizing up the role that dine-in business plays in their future; a one-size-fits-all strategy is not in the cards. Some fast-casual brands will lean into a post-pandemic revival in their dining rooms; the nature of their cuisine and the culture of their brand will lead them in that direction. On the other hand, brands that have experienced disproportionate success in growing their off-premises business will likely double-down on that success.
To date, it does not appear that the increases in dine-in business seen during the rebound of casual dining are coming at the expense of off-premises transactions. It is not to say that a brand cannot aggressively seek to grow their business for both off-premises and dine-in, but my prediction is that most brands will assess their opportunity as being stronger in one arena or the other and invest their resources accordingly.
Will some brands abandon dine-in all together? Possibly, but I think this will be rare. Even if their dine-in business has been in decline in recent years, most brands do not have the luxury of summarily dismissing a double-digit portion of their average unit volume. Some operational benefits may be realized, but it is unlikely that it produces enough cost savings to offset the contribution margin generated from the dine-in portion of the business. Operators may experience a paradigm shift and view their dine-in business as generating the cream of their profitability, even if it represents a proportionately lower percentage of their overall sales.
In the end, I believe that the industry will reach a new, healthier point of equilibrium. It is difficult to cite many positives that stem from the pandemic, but one of them may well end up being the opportunity to hit the reset button, and a better dine-in experience may come about as a direct result. Our industry will be better off for it.
Don Fox is Chief Executive Officer of Firehouse of America, LLC, in which he leads the strategic growth of Firehouse Subs, one of America’s leading fast casual restaurant brands. Under his leadership, the brand has grown to more than 1,190 restaurants in 46 states, Puerto Rico, Canada, and non-traditional locations. Don sits on various boards of influence in the business and non-profit communities, and is a respected speaker, commentator and published author. In 2013, he received the prestigious Silver Plate Award from the International Food Manufacturers Association (IFMA).